Ever since OKRs have been popularized we have seen a movement of measuring “outcomes over output.” That needs to be challenged.
As a leader within an organization, are you focused on rewarding the outcomes, or rewarding the effort? Since objectives and key results (OKRs) have been popularized we have seen a movement around “outcomes over output” but that needs to be challenged.
The role luck plays in outcomes
If you’re rewarding just the outcomes, this has a tendency to create a more conservative culture that takes safer bets and risks.
In the business world, we’re often chasing outcomes like growing revenue, increasing customer retention, or increasing product/feature adoption. We often do this by monitoring performance-based metrics such as tasking sales to hit their sales targets, and pushing engineering to build faster.
Quite often, the outcome is not actually in our control! Anything could happen, and more often than not, luck plays a major factor in achieving our goals. Daniel Kahneman has claimed the following as his favorite equation:
- Success = talent + luck
- Great success = a little more talent + a lot of luck
Daniel Kahneman was awarded the Nobel Prize for Economic Sciences in 2002. One of the intriguing findings of his research is that we drastically undervalue the influence of luck in many scenarios.
Google’s approach: Rewarding the effort
Even though Google helped to popularize OKRs as a goal-setting framework. In a recent Standford GSB podcast, Sundar Pichai mentioned that in order to encourage innovation you should be encouraged to take risks and innovate and to be okay with failure and reward effort, not outcomes.
Ultimately in business, we need to chase outcomes to be successful. In order to get there, you need to acknowledge the effort put in by those who show up and give it their all every single day. Rewarding the effort can lead to awesome, sustainable results that can help you achieve the most ambitious outcomes.
Great leaders, ones that lead to innovative breakthroughs, reward the effort.
Meta’s approach: Rewarding the outcome
In contrast to Google’s approach to return back its innovative roots, and focus on rewarding effort. Zuckerberg has told Meta staff he’s upping performance goals to get rid of employees who shouldn’t be here.
By increasing performance targets it’s not guaranteed that you are encouraging people to take those same riskier bets, especially if your job is on the line. Teams will become more conservative in their approach and only deal with certainty. This will likely lead to a more conservative approach, one that will be plagued by analysis paralysis. The inaction or delayed action might not be enough to drive the desired performance increases.
Focus on rewarding effort to hit those outcomes
It’s a marathon, not a sprint.
The effort teams put into reaching an outcome needs to be in focus, as that provides the most valuable learning opportunities and allows product teams to better enhance their skills.
Asking questions like:
- What did we learn?
- What should do differently next time?
Teams should be allowed to grow their talent/skills and increase the chances of a different outcome. Performance metrics should be used to ensure that you are conducting enough activities and are continuously moving to get you closer to your objective.
Leaders should reward team effort than just the results achieved. We must acknowledge not simply those who meet their objectives, but also those who do an excellent job and even those who help others grow in their profession.
If you want to acknowledge the effort people are putting in on a regular basis and getting closer to achieving those major outcomes check out enform.io and schedule a 30-minute demo call, and we’ll see where we can help you reward effort over outcomes.
